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IT : Section 194-I could not be invoked in respect of payments made only for transmission of electricity rather than for the use of transmission lines per se.

Facts:

• The issue that arose for consideration of Tribunal was:

Whether transmission charges paid by an electricity company for the transmission of electricity via transmission lines would attract TDS under section 194-I?

The Tribunal held in favour of assessee as under:

(1) Explanation (i) to section 194-I defines rent as any payment, by whatever name called, under any lease, sub-lease, or tenancy or any other agreement or arrangement for the use of land, building, plant, machinery or equipment, etc.

(2) It was evident from the Explanation (supra) that any payment, by whatever name called, would be considered as rent if it was made for the use of land, building, plant, machinery or equipment, etc. In the instant case, payment was made for the services of transmission of electricity and not for the use of transmission wires per se.

(3) If payment was made for use of an asset simpliciter, whether with control and possession in its legal sense or not, the payment could be said to be for use of an asset. However, if payment was made only for the purpose of specific act, i.e., power transmission in the instant case, and even if an asset was used in the said process, the payment could not be said to be for the use of an asset.

(4) Hence, section 194-I could not be invoked in the instant case, as the payments were made only for transmission of electricity rather than for the use of transmission lines per se.